A Pro-EU Economist’s Sober Assessment of What Drove the British to Leave

Brussels elites ignored sound economics to further their own agenda.

London — Sometimes a clear-eyed supporter of a certain point of view can best see what the weaknesses of that position is. After a shell-shocked panel of pro-Remain experts had delivered an autopsy of Britain’s membership in the European Union for the Mile End Institute Friday morning, I sought out the one member of the panel who had expressed concern about the EU’s “democratic deficit.” I got an earful about how an EU that refused to reform and acknowledge its limits invited Britain’s vote to leave this week.

Brigitte Granville is a French monetary economist who worked at the old European Economic Community in the 1980s before it morphed into the EU. She played a key role in restructuring the ruble while working for the Russian Ministry of Finance in the early 1990s. She moved to Britain because she found it a freer and less rigid country than her native land: “There are 5,000 people in charge of everything in France. They are all linked by school and marriage, and they are tight.”

Granville, now a professor at the University of London’s School of Business and Management, voted for Britain to stay in the EU this week: “I am an internationalist.” But she was nevertheless able to give a scathing account of just how insufferably arrogant, delusional, and power-grasping the EU bureaucracy has become. “This vote represents a revolt against elites who don’t take into account ordinary people or sound economics,” she told me.

Just ten days ago, Granville attended a major EU conference in Sopot, Poland, where Klaus Regling, the managing director of the European Stability Mechanism, was speaking. “He said things I couldn’t accept about how well the Euro was doing, so I spoke up,” she recalls. “He dismissed me by saying I didn’t know anything about economic history. Afterwards, several bureaucrats sought me out to chastise me for giving him a hard time. The audience was 1,000 people accepting what they were told.”

But what they were told was that Europe was finally returning to growth, monetary stability was being maintained, and the European Union’s plans to expand its powers were on track. That’s not how Granville sees it. “Their European project is a complete failure,” she said. In a 2014 opinion piece, she summed up the basic reason:

The predicament of Europe’s political establishment stems from a combination of irrational fear and vain ambition. This is particularly apparent in France, where the monetary union has often been viewed as a tool for harnessing Germany’s economic strength to project power worldwide. . . . France’s global ambition is apparent whenever its mainstream politicians discuss the euro. For example, in 2011, Edmond Alphandéry, a former economy minister, declared that a eurozone exit by a member country was as likely as a dollar exit by Texas or California. Here, on full display, was the wishful thinking that brought the euro into existence in the first place: its French architects dreamed of a Europe that could equal the US. That was always an illusory ambition, but it continues to cloud European leaders’ judgment.

After eight years of austerity, monetary shocks, and a reshuffling of accounts that would astound a three-card-monte con artist in Times Square, where is Europe? Greece is bankrupt, with a towering debt. Portugal has a debt load larger than even Japan’s.

France seems stuck in a permanent recession. Italy and Spain have still not reached the output levels that they had before the 2008 financial crisis. It’s only because of quantitative easing and negative interest rates that the eurozone hasn’t collapsed like a house of cards.

Small wonder, then, that a new survey by the Pew Research Center found that 61 percent of French voters have an unfavorable view of the EU. A clear majority want powers returned to the French parliament. The equivalent unfavorable figure for the EU by British voters was 48 percent in the Pew survey. On Thursday, 52 percent of voters voted to leave the EU, the most dramatic of demonstrations of an “unfavorable” attitude.

Dutch politician Geert Wilders is already calling for a referendum for the Netherlands to leave the EU. In Italy, a clear majority tell pollsters they would vote to leave. But the response of EU leaders is to ignore the rising tide of criticism and call for more European integration. “There is a real case for a strong monetary union with transparency and real enforcement of the rules of fiscal discipline,” Professor Granville told me. “But that’s not what is happening. They muddle through and make things worse.”

Although she voted for Remain, Granville does see the British vote as “huge, a real shock” threatening to burst the bubble of unreality that EU officials live in. The only way they can rescue their beloved European project of “ever closer union” would be to finally leave that bubble and explore the impact of their policies and anti-democratic rule on ordinary people. No one is holding their breath expecting this to happen. It seems inevitable that the firestorm touched off by British voters will jump the English Channel and inflame the continent.